Question: When is an entrepreneur not an entrepreneur? Well if Nassim Taleb, possibly the most acclaimed writer of non-fiction so far this century is right, many people who think they are entrepreneurs may, in fact, not be.
Taleb is the author of the Black Swan, a book so successful that its title has become a metaphor – referring to unexpected events that changed the world. The crisis of 2008 was a black swan event, arguably, the launch of the iPhone was a positive black swan and maybe AI is a black swan in the making.
Except, Mr Taleb devoted reams of pages in his books – including the arguably much better ‘Fooled by Randomness’ which said much the same things as ‘The Black Swan’, it just didn’t have such a catchy title – that the future is unknowable, and indeed that we wrongly interpret the lesson of history with hindsight – that history is largely a series of random events.
So, we can’t really say that AI is a potential black swan, because black swan events are not predictable. The main thesis of ‘The Black Swan’ is that we know that unpredictable things will happen, and when they do their impact will be huge.
Mr Taleb is now working on a book entitled ‘Skin in the Game” – a phrase he used frequently in his previous books.
Yesterday, Mr Taleb tweeted an extract from the book, and it touched upon the theme of entrepreneurs.
“Owing to the funding and current venture capital mechanisms, many people mistaken for entrepreneurs fail to have true skin in the game in the sense that their aim is to sell the company to someone, or ‘go public’ by issuing in the stock market. The true value of the company, what it makes and its long-term survival are of small relevance to them. This is a pure financing scheme and we will exclude this class of people from our ‘entrepreneur’ risk taker class. We can easily identify them at their ability to write a convincing business plan.”
So, is that right, if you are founding a business with the aim to sell-out or float, does that mean you are not a true entrepreneur?
The point that the wise one, Mr Taleb, overlooks, as indeed many people do, is that entrepreneurs often put everything they have into their business, to them it feels as they put their soul on the line.
The skin in the game, as far as the entrepreneur is concerned, is their soul – the very essence of what makes them who they are.
If the funding for their business is such that their financial exposure is not great, then they still have skin in the game, the skin is the enormous energy, psychological commitment, indeed their soul, that they invest.
But just like all good parents, a good entrepreneur needs to know when to let go.
Some set up a business without a thought to an exit strategy, some have such a strategy in mind all the same. Whether they do or not, it makes no difference to whether they are an entrepreneur, and whether they have skin in the game, depends not so much on their money commitment or long-term plans, but the passion resilience, and sheer energy that they commit.